A DATE TO REMEMBER – OCTOBER 1, 2008

By: Cook, Yancey, King & Galloway, APLC

Due to the rapid cost of health care, studies have been conducted to determine the cost of medical errors per year. An estimate placed the cost at $17 Billion to $29 Billion per year, with the average cost per injury for adverse events at $58,766 and for each negligent event the cost of $113,280.

The 2005 Deficit Reduction Act mandated that never events or hospital acquired conditions (HACs) and present on admission conditions (POAs) be tracked and reported. The specific criteria for “Never Events” are reportable events, which should never have happened and could have been prevented; conditions which result in higher payment to the facility when submitted as a secondary diagnosis; and a condition which can be reasonably prevented by adoption and implementation of evidence-based guidelines.

In an effort to pay for better care and not fee for service, the Centers for Medicare and Medicaid Services (CMS) are looking for alternatives to help reduce or eliminate the occurrence of “never events.” Never events increase the cost of patient care and are noted as being clearly identifiable, preventable, and serious in their consequences for patients. Starting on October 1, 2008, discharges from Acute Inpatient Prospective Payment System (IPPS) Hospitals will not receive additional payment when one of the selected conditions occurs during hospitalization (i.e., was not present on admission). The CMS will pay as if the secondary diagnosis does not exist.

The goal of the new reimbursement plan is to identify standards in both payment and public reporting. In the first three years, the new payment policy is expected to save $50 million dollars, and by the year 2012 and thereafter, to save approximately $60 million per year. Hospitals were required to start documenting present on admission secondary diagnoses on October 1, 2007. This was to give the facilities one year to prepare for the new payment plan. The following type facilities are presently excluded: critical access hospitals, long-term care hospitals, Maryland Waiver Hospitals, cancer hospitals, children’s inpatient facilities, inpatient rehabilitation facilities and psychiatric hospitals.

The CMS has identified the qualified healthcare provider who is legally responsible for establishing the patient’s diagnosis as the person who is responsible for documentation, or in other words, the physician. Sources of information for establishing the POAs include the emergency room notes, history and physical, progress notes, admitting notes, but not nurses notes.

The POA coding includes “Y” for diagnosis is present on admission and CMS proposes to pay. A “N” indicates the condition was not present on admission and the CMS proposes not to pay. A “U” code implies a lack of documentation and the CMS proposes not to pay. When a “W” is entered as the code, it indicates the provider is unable to clinically determine whether the condition was present at the time of the inpatient admission, and CMS proposes to pay. Finally there is a category of “1” as unreported or not used. An example of a “1” would be a motor vehicle accident as an external cause of injury. If a correct code is not entered, the record will recycle for payment.

Medicare is encouraging Medicaid to follow with a similar payment policy, and the private insurance companies are adopting the payment plan as well. The new payment plan will pay the DRG assigned to a discharge with the identified diagnosis codes which does not result in higher payments based on the secondary diagnosis codes.

From a legal prospective, I view this as fertile ground for identifying codes for medical malpractice claims. “Never Event” speaks volumes. If the payment agencies are not going to pay, will the extra cost be assigned to the patient? If the event should never have happened, should the patient be expected to pay? These are questions which I am sure will arise as this system is implemented.